RSC Budget Proposes Cuts to Pay, Retirement Benefits

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By on July 25, 2017 in Pay & Benefits, Retirement with 0 Comments

Hands cutting stack of $100 bills on a plate using a knife and fork

As the new fiscal year approaches, various political groups are submitting their budget proposals for FY 2018.

The White House released its 2018 budget proposal and the House Budget Committee recently offered one as well.

Both are controversial topics among the federal workforce as evidenced by the number of comments from our readers; follow the above two links to read about the budget proposals and participate in the discussion.

The Republican Study Committee (RSC) has now released a budget proposal as well. The RSC is caucus of conservatives in the House of Representatives. Its budget is the more conservative of the three, offering the deepest levels of cuts in an effort to curtail the growing federal spending that is evident in the deficit which now stands at just under $20 trillion.

The Republican Study Committee says of its budget proposal:

The RSC budget aims to go well beyond the least common denominator of politics to reflect the American people’s desire to see a more responsible and accountable government. As with any proposal that dares to suggest what ought to be done, rather than just what is easy to do, this budget will inevitably be attacked as too conservative, too bold, too sudden, or too difficult to achieve. However, the measure of success for ideas is not their ease, but their persistence and effectiveness.

These are some of the proposals from the RSC budget that will be of most interest to federal employees. A copy of the complete RSC budget is included at the end of the article.

Changes to Pension Plans

The budget proposal proposes several reforms to federal employee pension programs:

  • Retirement benefits would be calculated based on the highest five years of earnings instead of high three.
  • The Special Retirement Supplement (SRS), which provides additional benefits for retirees younger than 62 but who had a long federal work history, would be eliminated.
  • All federal employees, not just future ones, would contribute more towards their retirement programs to match what was mandated under the Middle Class Tax Relief and Job Creation Act of 2012. This law required new federal employees to contribute 3.1% to their retirement, so presumably this is the figure the budget proposal would require of all federal workers.

The RSC budget said one reason for these pension plan changes is to bring federal employees’ benefits more in line with those of the private sector.

“Under FERS, federal workers hired before 2013 contribute only 0.8 percent of their pay, while the taxpayers contribute 11.7 percent of employees’ salaries. A recent CBO report found that, on average, federal civilian employees receive 47 percent more in benefits than the comparable average private-sector employee,” said the budget proposal.

Reduce the Annual Across-the-Board Adjustment for Federal Employees’ Pay

The RSC budget proposal states, “Unlike most Americans, federal workers receive an automatic pay increase every year under the Federal Employees Pay Comparability Act of 1990.” It cites a CBO report which found that federal employees are generally paid more than their private sector cohorts in many cases.

Consequently, it recommends that beginning in FY 2018, the annual across-the-board increase for federal workers should be reduced by half a percentage point below the expected automatic increases.

Make Federal Employees “At-Will” Employees

The budget recommends adopting Congressman Todd Rokita’s (R-IN) legislation to make federal employees “at-will” employees. The budget notes that Congressional staffers are currently considered “at-will” and federal employees should be as well.

Adopt Premium Support for Federal Employee Health Care

The budget proposal states that federal employees pay roughly 30% of their premiums under the Federal Employees Health Benefits Program (FEHB) and the government picks up the remaining 70%. “Because this ratio does not change with the higher-priced coverage options, federal employees have the incentive to choose the more expensive plans on the taxpayer’s dime,” says the budget.

As a result, it recommends transitioning to a premium support system in which the government would offer a standard federal contribution towards the purchase of health insurance and employees would be responsible for paying the rest, thus incentivizing employees to purchase more modest health care plans with an appropriate amount of coverage to suit their needs.

Using the Holman Rule to Eliminate Unnecessary Positions

The Holman Rule was originally used in the 1800s to cut government spending. It gave the House Committee on Appropriations authority to cut back on spending by reducing the number  of federal officials cutting the salary of federal officials. It was also a way to quickly reduce the compensation of any person paid out of Treasury funds and to reduce the amount of money covered in an appropriation bill. (For details, see How to Quickly Reduce Federal Employee Salaries and Agency Programs)

With regards to the Holman Rule, the RSC budget says:

If used correctly, the Holman Rule could be a powerful tool for conservatives in the House of Representatives to work with the Trump administration to reshape the federal bureaucracy so that it is more accountable and responsive to the American people.

The president and federal agencies should work cooperatively with the House to identify executive branch positions that are unneeded and the appropriations bills considered by the House should include Holman provisions to restrict, limit, and eliminate these positions.

Eliminate the Use of Official Time

The budget proposal recommends adopting Congressman Jody Hice’s (R-GA) bill, The Official Time Reform Act, to stop “the federal government’s sanction of union activity at federal expense” thereby making “the federal workforce more effective and efficient.”

Prohibit Automatic Collection of Union Dues for Federal Employee Unions

Regarding dues for federal employee unions, the RSC budget states:

Currently, the federal government acts as the dues collector for unionized federal workers by deducting union dues from an employee’s paycheck and then remitting dues to the union.
If a worker wants to join a union, then the union should collect its dues from the worker, not force the taxpayers to do it. This budget recommends prohibiting the automatic deduction of union dues for federal workers.

Reduce the Size of the Federal Workforce Through Attrition

Under this proposal from the budget, new hires would be limited to one employee for every three who leaves the federal workforce, thereby shrinking the size of the overall federal workforce. However, the president would have flexibility to adjust federal employment in case of a national emergency.

What Does All of This Mean?

Like the other budget proposals mentioned at the start of this article, this is another proposal reflecting the philosophy of some lawmakers on government spending.

Any changes in legislation must be enacted by Congress, plus federal agencies, individual lawmakers, and federal employee advocacy groups all can (and will) weigh in on what they want to see done in terms of actual laws being passed.

As the article noted, some of the bills have been introduced already, but must be passed by Congress and signed into law by the president. Bills are often altered as they are debated and work through the legislative process before becoming law, if they even become law at all. Rokita’s bill, for example, was introduced in a past session of Congress but never advanced.

However, as the RSC authors themselves stated in their budget proposal:

Over time, ideas first espoused in RSC budgets are incorporated into the House budgets, the president’s budget, and into law. In the words of one former Congressman who opposed our solutions, “You’ll get attacked in your district for not supporting the RSC budget… In order to blunt some of those attacks, the Budget Committee has moved in the direction of their budget.” The RSC budget’s success is that it pulls the rest of the Republican Conference towards conservative solutions.

In other words, it’s an effort to push a mindset that guides future lawmaking.

What Do These Proposals Mean for Me Personally?

In anticipation of questions we always receive on proposed benefits cuts such as these, please bear in mind that these are just proposals and no details beyond what are listed here are known at this time. Only until (or if) any of them were to become law would we know how they would impact current or former federal employees for things such as grandfathering current employees, actual amounts of pay cuts, etc.

For further information, be sure to read What Impact Will the Proposed Cuts to Our Benefits Have on Me?.

We will continue to keep you apprised on the introduction or advancement of bills in Congress that would impact your pay or retirement benefits.

FY 2018 Republican Study Committee Budget

© 2018 Ian Smith. All rights reserved. This article may not be reproduced without express written consent from Ian Smith.

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About the Author

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce.

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